Davdent Pty Ltd v Attinger

[2001] NSWSC 902

CITATION:	Davdent Pty Ltd v Attinger [2001] NSWSC 902 revised - 17/10/2001
CURRENT JURISDICTION:	Common Law
FILE NUMBER(S):	SC 12449/99
HEARING DATE(S):	29-31/08/01
JUDGMENT DATE:	16 October 2001
PARTIES :	Davdent Pty Ltd v Heather Ann Attinger
JUDGMENT OF:	Taylor AJ at 1

COUNSEL :	M.W. Young - plaintiff Defendant in person.
SOLICITORS:	R L Kremnizer & Co - plaintiff
CATCHWORDS:	Claim for possession.
LEGISLATION CITED:	Real Property Act 1900 Conveyancing Act
CASES CITED:	Fisher & Lightfoot's Law of Mortgage, Aust. Ed. Butterworths 1995. Codelfa Constructions v State Rail Authority (1982) 149 CLR 337 Project Research Pty Ltd v Permanent Trustee of Aust Ltd BC 9001610 SC Hodgson J, 14/12/90
DECISION:	1. Defendant's application for adjournment is refused.; 2. Leave granted to file in Court an amended cross claim as against the plaintiff.; 3. Refuse leave to join additional parties identified in the defendant's notice of motion.; 4. The plaintiff is entitled to possession.; 5. The plaintiff is entitled to the sum of $238,000.00.; 6. The plaintiff is entitled to the costs of recovery of possession. Such costs to be assessed.

THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

TAYLOR AJ

12449/99 - DAVDENT PTY LIMITED v HEATHER ANN ATTINGER

JUDGMENT

1   Outline of the Claim and the application for adjournment and amendment

HIS HONOUR: A claim for possession of land. The defendant seeks an adjournment of the hearing and leave to file a cross claim. The purpose of the adjournment is to enable transfer of the proceedings to the Federal Court. The plaintiff opposes any adjournment. The defendant appears unrepresented. This is not a ground for adjournment relied on by the defendant. The Court decides that the cross claim raises no new issue against the plaintiff; the defendant is well able to represent herself, no utility in an adjournment, the point has been reached where the plaintiff’s claim must be determined.

2 This is a claim for possession of land. The defendant is the registered proprietor of the whole of the land contained in Folio Identifier 6/7000720 being property known as 22 Fiona Avenue Wahroonga. On 4 April 1998 the plaintiff advanced to the defendant the sum of $238,000 secured by a registered mortgage over the property. By a statement of claim filed on 11 October 1999 the plaintiff claims that the defendant has failed to repay the principal sum in accordance with the terms of the mortgage. The default continued after service upon the defendant of a notice under s 57(2) (b) of the Real Property Act. The plaintiff claims possession of the land, an order that the defendant pay to the plaintiff the sum of $238,000 and costs.

3   At the outset of the hearing the defendant applied for an adjournment to enable transfer of the proceedings to the Federal Court. Leave was also sought to file a cross claim. The plaintiff opposed any adjournment.

4   Should the Proceedings be Adjourned?

The Court is required to decide whether the proceedings should be adjourned. If not, it is to hear and determine the plaintiff’s claim. The defendant’s pleadings required some clarification. After extensive discussion with Mrs Attinger the Court concluded that the cross claim raised no new allegations by her against the plaintiff. Those issues are justiciable in this Court. The cross claim has not been notified to the several persons named who are not parties to the litigation. The issues to be raised by the defendant have been aired between the parties on many occasions, as far back as August 1998, when the defendant brought proceedings in the Consumer Claims Tribunal. This involved the parties in considerable contact during which the issues the subject of this case were discussed. The claim was withdrawn in October 1998. By that time Mrs Attinger was aware of the mortgagee’s intention to exercise power of sale. She sought an ex parte injunction, which was ordered, to restrain the sale. Ultimately the plaintiff’s proceedings were dismissed and Mrs Attinger was ordered to pay the mortgagee’s costs on an indemnity basis. Those costs form a part of the present plaintiff’s claim for costs of recovery of possession. The Court in those proceedings concluded that no basis had been advanced to suggest the mortgagee was not entitled to possession. Reference was also made by the Court to Mrs Attinger’s “assertions of a very serious kind” against those parties to that litigation, now sought to be joined in these proceedings.

5   A further set of proceedings was commenced by the mortgagee seeking possession. The statement of claim was not served. This was because the mortgagee took the view that it was unnecessary to obtain an order for possession of the vacant land. Mrs Attinger argues that the failure to serve the statement of claim is a fundamental defect in these proceedings because it contravenes Part 4 r 2 (e) of the Court’s rules in relation to commencement of proceedings for possession by way of statement of claim. Her case is this amounts to misconduct on behalf of the mortgagee, disentitling it to the relief sought.

6   The present case is the third set of proceedings in this Court. The recent procedural history indicates a persistent failure of the defendant to be ready for hearing. It is useful to review the recent history, as it is one reason for the Court’s conclusion that the point has been reached for a determination of the plaintiff’s claim for possession.

16/3/00 Justice Kirby granted leave to the defendant to file her defence

within 14 days. The defendant was represented by Counsel.

29/3/00 Notice of Motion filed annexing Draft Defence.

18/05/00 Acting Justice Davies made an order deeming the Defence duly

filed and ordered the plaintiff’s affidavits be served by

15 June 2000, defendant’s affidavits to be filed and served by

6 July 2000, plaintiff’s affidavit in reply to be filed by

20 July 2000. His Honour declared that the matter justified an order for

expedition. He also dismissed the plaintiff’s motion.

14/06/00 Status Conference before Registrar Howe - defendant failed

to appear. A new timetable was set to accommodate defendant’s

breach.

17/08/00 Plaintiff attempted to file Certificate of Compliance on the

grounds that the plaintiff had complied. This was rejected by

the Registry on the grounds that the defendant had not filed

any affidavit.

24/08/00 Proceedings referred to compliance conference on

17 October 2000.

17/10/00 Registrar Jupp made an order that the defendant file affidavits

by 3 November 2000. Final Conference set for 23 November 2000.

24/10/00 Court advised proceedings transferred to Possession List, final

conference vacated and matter listed for 15 December 2000.

15/12/00 Directions Hearing before Justice Greg James. The defendant

stated that she wished to put on a cross claim and further

evidence. His Honour ordered the defendant to file a

cross claim, Defence or affidavits before 2 February 2001.

His Honour ordered any Notice of Appearance by a legal

representative of the defendant be filed before

2 February 2001. On 2 February 2001, plaintiff was to file

Statement of Facts and issues.

2/02/01 Directions Hearing before Justice Greg James. Defendant was

ordered to file and serve all evidence she wished to rely upon by

2 March 2001.

20/02/01 Directions Hearing before Deputy Registrar Howe. Defendant

ordered to file and serve any evidence before 2 March 2001.

6/03/01 Directions Hearing before Deputy Registrar Howe. Defendant

ordered to file and serve any evidence by 20 March 2001.

20/03/01 Directions Hearing before Deputy Registrar Howe. Defendant

ordered to file and serve any evidence by 23 April 2001.

29/03/01 Davdent files affidavit of Matthew Bransgrove attesting to the

lack of evidence filed by the defendant.

4/04/01 Davdent serves affidavit of Matthew Bransgrove sworn on

29 March 2001 on the defendant.

23/04/01 Directions Hearing before Deputy Registrar Howe. Deputy

Registrar Howe refuses to refer motion to strike out Defence

to a Master.

7/06/01 Defendant approaches Justice Kirby for Directions and his Honour

granted further time until 5 July 2001 for cross claim to be filed

however the trial date of 28 August 2001 stands.

7   Further delay in this matter would give rise to an understandable sense of grievance in the plaintiff. This is particularly so as it is not in dispute that payments under the mortgage ceased about the time of commencement of these proceedings.

8   The new defence and cross claim can be characterised as repeating the contentions and defences that were in the earlier document filed in these proceedings. The allegations made by the defendant during the in - court discussion clarifying the issues, were familiar to the plaintiff. It was able to meet these matters without adjournment. In so far as it was necessary for the defendant to give oral evidence in addition to the affidavit material relied upon by her the plaintiff accommodated that necessity. So far as the allegations of misconduct against the plaintiff involving valuation of the property are concerned the defendant’s case goes no higher than the assertion that the mortgagee must have known of the alleged misconduct by the persons not party to these proceedings. In all these circumstances the Court formed the view that there was no utility in the adjournment application and that it was in the interests of justice that the Court proceed to hear and determine the plaintiff’s claim. It should grant leave to file the cross claim against the plaintiff but refuse the implied application to join the other persons as defendants.

9   At various points in her dispute with the plaintiff the defendant has had legal representation. Mrs Attinger said that no one will take her case on at the moment. She did not rely on this difficulty on her adjournment application but nevertheless the Court satisfied itself that she was capable of representing her interests, before hearing the evidence in the plaintiff’s case.

The plaintiff proves the defendant’s ownership of the land, the loan, the mortgage, the required statutory compliance and continuing default .

11   It is not in issue that:

(a) the defendant is the registered proprietor of the subject land.
(b) On or about 4 April 1998 the plaintiff lent to the defendant the sum of $238,000.

12   (a) The defendant secured the repayment of the loan to the Plaintiff by a mortgage of the land dated 4 April 1998 registration No. 309074.

13   (a) The Mortgage provided that instalment payments were calculated from 4 April 1998 and were to be paid by the 3rd day of each and every calendar month commencing 3 May 1998 until the loan was repaid.

14 The defendant does not admit to service of the notice in accordance with s 57 (2) (b) of the Real Property Act 1900. The Court is satisfied from the evidence of Mr Bransgrove that on 27 August 1999, Kremnizer & Co sent a letter to Mrs Attinger attaching a s57(2)(b) Notice. She replied by facsimiles dated 13 September and 21 September. The Court is satisfied the notice was served.

15   The plaintiff was also required to prove that the notice complied with the provisions of the Real Property Act and the Conveyancing Act.

16 In the context of this case the plaintiff, as registered mortgagee, may exercise the power of sale provided for in s58 of the Real Property Act where there has been default in repayment of the principal and a notice has been served in accordance with s57(2) (b) of the Real Property Act. By subsection 3 of s. 57 a notice complies if:

( a) it specifies that it is a notice pursuant to section 57 (2) (b) of the Real Property Act 1900,
(b) it requires the mortgagor, charger or covenant charger on whom it is served:
(i) to observe, except in relation to any time expressed in the covenant, agreement or condition for its observance, the covenant, agreement or condition in respect of the observance of which the mortgagor, charger or covenant charger made default, or
(ii) as the case may be, to pay the principal, interest, annuity, rent-charge or other money in respect of the payment of which the mortgagor, charger or covenant charger made default,
(c) if the costs and expenses of preparing and serving the notice are to be demanded, it requires payment of a reasonable amount for those costs and expenses and specifies the amount, and
(d) it notifies the mortgagor, charger or covenant charger that, unless the requirements of the notice are complied with within one month after service of the notice (or, where some other period exceeding one month is limited by the mortgage, charge or judgment for remedying the default referred to in the notice, within that other period after service of the notice), it is proposed to exercise a power of sale in respect of the land mortgaged or charged.

Each of the notices issued by the plaintiff complies with these requirements.

The plaintiff must also comply with the Conveyancing Act, s111(3) which is in similar terms to s 57(2) of the Real property Act. The notices issued comply with s 111.

The plaintiff must also prove compliance with s 92 of the Conveyancing Act which states that:
Where the mortgagor has made default in payment of the principal sum at the expiry of the term of the mortgage, and the mortgagee has accepted interest on the said sum for any period (not being less than three months) after default has been so made, then, so long as the mortgagor performs and observes all covenants expressed or implied in the mortgage, other than the covenant for payment of the principal sum, the mortgagee shall not be entitled to take proceedings to compel payment of the said sum, or to enter into possession, or to exercise any power of sale, without giving to the mortgagor three months' notice of his or her intention so to do.

17   Mrs Attinger strenuously argued that the required period was six not three months. She has not demonstrated that such a rule exists. The Court considers the most likely source of this confusion in the defendant is a passage from Fisher and Lightfoot’s Law of Mortgage Australian Edition Butterworths 1995, Tyler, Young and Croft para 1.44 which states:

“Sometimes a rule will be found partially in a statute and partially in an equitable doctrine. Thus s 92 of the NSW Act gives some protection to a defaulting mortgagor where the mortgagee has continued to accept interest …. This must be read in conjunction with the six months rule, a rule of equity that a mortgagor who had made default in the repayment of principal could not pay out the mortgagor without warning but had to give six moths notice or pay six month’s interest: …”

18   The six month rule has no application to this case. The plaintiff is required to prove notice under s 92 was given. That section does not specify the manner in which the notice must be given. I have concluded that in the context of this case there was sufficient notice to the defendant that the mortgagee intended to enter into possession to satisfy s 92. This is for a number of reasons.

19 The defendant has admitted receiving the s.57 (2) (b) notice in October 1998. She also acknowledges that the mortgagee’s attempt to sell the property came to her attention when reading a newspaper. Further written notices were forwarded.

20   The evidence discloses that the defendant sought to refinance. The Court is satisfied that she knew in February 1999 that she needed to refinance. The defendant has therefore had in excess of the three month period prescribed by section 92 and no defence under it.

21   Issues Raised By The Defendant

The issues of the term of the mortgage, non disclosure by the plaintiff of a valuation, no default under the mortgage, tender of discharge of mortgage, non service of the statement of claim are discussed.

22   The term of the mortgage.

The plaintiff contends it was a term of the mortgage that the loan was to be repaid in full on 3 October 1998. The defendant denies this.

23   This issue arises because the mortgagor covenants to pay the principal sum (clause 3 of the mortgage) on the same day the funds were advanced, that is, 4 April 1998. Theoretically such an extremely short term loan could be made. The next clause in the mortgage states that the first of the interest payments is to be computed from on 4 April 1998 and made on 4 May 1998. The two clauses cannot stand together. The mortgage is, in this respect, ambiguous.

24   Extrinsic evidence in aid of the construction of a written agreement is admissible in a case of ambiguity. This principle was discussed by Mr Justice Mason in Codelfa Constructions v State Rail Authority (1982) 149 CLR 337.

25   His Honour said a p252,

“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. ”

26   His Honour then stated that prior negotiations as reflections of the parties actual intentions are not receivable. What is permissible is evidence of the objective framework of facts within which the contract came into existence, and to the parties presumed intention.

27   Tendered in evidence as, exhibit K, was an R.L. Kremnizer & Co trust account receipt of 3 April 1998, that is the day before the mortgage was made. It records the receipt of $226,100 from the mortgagee. This sum represents the advance of $238,000 less prepaid interest of $11,900 (Bransgrove affidavit paragraph 15). The receipt aids in the construction of the contract to resolve the ambiguity as a result of clauses 3 and 4 of the mortgage. It is an objective fact in existence at the time the contract was made showing that pre paid interest was calculated for six months. It is persuasive evidence that the term of the loan was for six months.

28   It is not necessary to utilise Mrs Attinger’s evidence in reaching this conclusion but consistently her evidence was that by the time she signed the mortgage she was aware the loan was for a six month period. Her complaint is not that the term really is for 12 months, but that she desired 12 months and was only given six.

29   The Court has concluded that the contract should be construed as being for repayment of the principal after the expiry of six months from 4 April 1998.

30   Non Disclosure by the Plaintiff of a Valuation

Mrs Attinger contends that Mr Bleier and Mr Pecotic had access to a valuation of the property by Hecek and Associates dated 23 February 1998. She contends that they deceived her at a meeting of 2 March by not disclosing the fact that the valuer valued the property at less than $425,000. Davdent must have known about this.

31   The following facts appear from the affidavits relied on by the parties and the evidence of Mr Bransgrove and the defendant. On 13 February 1998, Jason Pecotic of AAA Finance Services Pty Limited forwarded by facsimile transmission a loan application on behalf of the defendant to David Bleier of Bleier Mortgage Corporation.

32   The loan application was preceded by a covering letter which stated:

“This is the block of land at Wahroonga (22 Fiona Avenue).
The value of the land is $425,000, we need as much as possible as a builder is starting to commence building soon.
The funds are required to pay out a current first mortgage (also private funds) $210,000 and to pay for the landscaping of the re-development (three townhouses).”
The client also wants the interest capitalised for twelve months.

33   On the same day Kremnizer & Co issued a loan offer by writing to Bleier Mortgage Corporation offering finance to the defendant on the following terms:

Loan Advanced: The lesser of $233,000 or 55% of the valuation.
Interest Rate: Eight per cent pre-paid for the term of the loan.
Term: Twelve months.
Security: First mortgage at a property known as 22 Fiona Avenue, Wahroonga.

34   On 23 February,1998 Hecek & Associates conducted a valuation of 22 Fiona Avenue, Wahroonga and valued the property at $340,000.

35   In evidence Mrs Attinger told the Court of the circumstances, as she understood them, surrounding the valuation of 23 February 1998 and her claim that the property was undervalued.

36   She said that on 2 March 1998 she had an appointment at 2 pm to go in and hand the cheque over for the valuer’s fee. Before she left home she rang her solicitor, Karen Aitkens from Deacons Graham & James and I said, "I'm going in now to hand over the thousand dollar cheque but I'm a bit nervous. Can you please stand by?"

37   Mrs Attinger went to Double Bay to the office of the Bleier Corporation. She rang her solicitor when near that office and said, "I rang him, I'm just going up. My son has given me a thousand dollars in cash and I'm going into the bank. I will get a bank cheque so they can cash it immediately and also I have a record of the slip, a $1,000 bank cheque."

38   She obtained a bank cheque. She then met with Mr Pecotic and Mr Bleier in what she described as the office of Mr Bleier and Mr Kremnizer. Her evidence was that she said, "I've come. This thousand dollars represents two valuations but I've made out a cheque for a thousand dollars because you said that the valuation had come in right at 425."

39   She also said "Look, I've got the bank cheque here, it's non refundable so if I accept your offer I cannot ask my son for another thousand dollars, I cannot keep asking him. If I take up the offer I lose a thousand dollar, I can't go for the other loan." Her evidence was that she then said, "Be very, very sure the valuation came in right." Mr Bleier and Mr Pecotic said "The valuation has come in right". Mrs Attinger still had doubts. She said, "Show me the valuation because this money is for the valuation. I'm paying for the valuation, I have every right to look at the valuation" and they said "Don't worry, it has come in all right. You'll get your money."

40   She then rang her solicitor apparently in the presence of Mr Bleier and Mr Pecotic. She said "Karen, I've arrived here and I've checked with them and they said the valuation has come in all right but they said they won't show me the valuation. They said they don't have to show it to me." She then said, "I've paid for the valuation. I have every right to look at the valuation." She then handed the phone to Mr Bleier and said, "Mr Bleier, you talk to my solicitor, Karen, from Deacons Graham & James, and tell her the valuation has come in all right and you will send her the mortgage documents". Her evidence was she heard him say, "It's alright the valuation has come in at 425".

41   She said further in evidence, "Fair enough", I'm sure they know the value of the property, especially the fact that I went into the valuation officer, the office of the valuer, Hecek, and went to the valuer's office and showed him the plan of the dual occupancy. It is worth much more than 425 but I'm keeping it at 425 because I want to borrow 260,000, which is 70 per cent of 425,000 and when they said the valuation has come in right, I said "I know what the properties are right in that area. We built a house that is almost back to back to where the block of land is. The thing is, you have to tell me the valuation definitely otherwise I lose my thousand dollars, I lose the other loan. It is too late for me to go to the other loan, we have been negotiating since 18 February, the last two months."

42   Mrs Attinger said she said all of this at the meeting, “over and over again”. Mrs Attinger told the Court she said, "You have got to tell me now, otherwise if I sign the papers and if I don't agree with you, I may not get the $1000. It is non-refundable". They said, "No, it is coming all right. Don't worry it is coming". I handed the phone over. They spoke to Karen. He said, "It's coming alright. We have got the mortgage documents renewing previous mortgages. I took the phone back from Mr Bleier and I said, "Karen", I said, "Do you think everything's all right? I haven't done this before and I am not quite sure". She said, "I am sure you have asked him that many times. What can we do? We can only take them on trust. If it is not the right valuation, they won't take your right valuation and later on change their minds". I still had a little doubt in my mind and I said - she said, "If he's confirmed it, all we can do is just take them on trust" and she said, "He promised to send me the mortgage documents".

43   She handed over the $1000 bank cheque. The response was, "Don't worry, we will send - fax the documents to Karen". She gave him the address and phone number. The defendant left the premises and went to her local MP's office. She sent a fax from there to the previous mortgagees to say the loan had come through.

44   The correspondence shows that on 2 March, AAA Finance Services forwarded a facsimile transmission to Mr Bleier noting that Mr Pecotic had spoken with the defendant and advised her that she would be signing a brokerage authority from AAA Finance with Bleier Mortgage Corporation Pty Limited. It stated “The client needs to borrow $263,000 which is approximately 62% of valuation”. Mr Pecotic, the author of the facsimile, also noted he had spoken to the valuer and the value of $425,000 for the block of land, “Is well within reason”. He then concluded, “However, as I told you this morning he won’t formally give us a valuation until he knows he is going to get paid.” This communication took place before the meeting with Mrs Attinger.

45   By 5 March nothing further had happened so Mrs Attinger telephoned her solicitor, and said, "Karen, I haven't heard from you. Have you received the mortgage documents?" She said, "No Mrs Attinger, they haven't come through. She telephoned Mr Bleier and said, "What is going on? My solicitors haven't received the mortgage documents". He said, "No, we have changed everything. He said, "The valuation has come in at $360,000, not $425,000."

46   She then said, "How can it come down from $425,000 to $360,000 in three days? "Why didn't you tell me that? I would not have handed the cheque over to you if I knew the valuation has come down, because I would not get the amount of money I needed and I would not be able to go to Kuringai Council and put my plans in. The reason why I asked for the extra 260,000 - 300,000 is to have the extra money to put my plans to council.” Mr Bleier said, "Oh, we have changed everything. We have changed the interest rates. We have upped the interest rates from 8 per cent to 10 per cent. We have reduced the term of the loan from a year to 6 months and we have reduced your loan by $30,000. We have taken away the second mortgage. Instead of it being 263,000 it is 238,000".

47   On 5 March 1998, a “ Mortgage Task Sheet” was completed in R L Kremnizer & Co’s office. Those sheets are used by Robert Kremnizer, the principal of Kremnizer & Co, to instruct para-legal staff in the preparation of mortgage documentation. The Mortgage Task Sheet records that the term of the loan was to be for six months.

48   On 5 March 1998, Kremnizer & Co also issued a fresh loan offer by writing to Bleier Mortgage Corporation offering finance to the defendant on the following terms:

Loan Advance: The lesser of $238,000 or 70% of the valuation.
Interest Rate: Ten percent pre-paid for the term of the loan.
Term: Six months.
Security: First mortgage at a property known as 22 Fiona Avenue, Wahroonga.

49   On 12 March 1998, Kremnizer & Co wrote to the plaintiff enclosing a specific lending authority pursuant to the Legal Profession Act 1987. The specific lending authority included the following details:

Mortgagor: Heather Ann Attinger.
Term of Mortgage: Six months.
Total of Mortgage Advanced: $238,000.

50   On 12 March, Kremnizer & Co wrote to the defendant’s solicitors, Deacons Graham & James, enclosing documents including the mortgage.

51   On 1 April 1998, Deacons Graham & James wrote to Kremnizer & Co enclosing the executed security documents requested in the letter of 12 March.

52   On 3 April, Kremnizer & Co received the sum of $226,100 from the plaintiff. The sum of $226,100 represented the advance of $238,000 less pre-paid interest of $11,900.

53   On 3 April, Kremnizer & Co sent settlement instructions to Hind & Associates, Registration Clerks, requesting them to attend for settlement at 12pm on 3 April 1998. The settlement occurred that day.

54   On 4 April 1998, the mortgage was registered as 3909074 over the land contained within Folio Identifier 6/700720.

55   On 14 April, Kremnizer & Co wrote to Deacons Graham & James enclosing an epitome of mortgage.

56   The plaintiff’s explanation for not withdrawing from the transaction during the period from 5 March to settlement was that she intended to recover her position by successful proceedings in the Consumer Claims tribunal. In the Court’s view this is not credible.

57   The figure of $425,000 was never set by a valuer. Mrs Attinger explained how it came about that the figure was employed as a valuation.

58   She said in evidence:

“ I set the value because although it is worth at least 600,000 it is subdivisible into two lots of 260 square metres for each lot. If you take two lots, a valuer is supposed to value it, if it can be subdivisible. I said, "Keep it at 425,000 because 70 per cent of 425 is the exactly the amount I need. I don't need value to it at 550,000 because 75 per cent of 550 will be too much. I don't need that extra money". At this stage I wanted it to be divided and my sons were going to take it over and build the three houses.”

59   Conclusions on the Valuation Issue.

I have reached the following conclusions in respect of the valuation issue.

(a) Mrs Attinger was of the opinion that the property had a value of $600,000. This was her own assessment and unsupported by a valuation from a qualified valuer.

(b) The defendant’s financial consultant arranged a valuation to be obtained from Hececk.

(c) Hececk would not hand over the valuation until paid the valuation fee of $1,000.

(d) There is no credible evidence that Hececk had informed Mr Pecotic or Mr Bleier that the valuation was $360,00 as at 2 March. The evidence is to the contrary.

(e) Mrs Attinger was only prepared to pay for a valuation that supported her assessment.

(f) Mr Pecotic informed her that the valuer had indicated her assessment was not unreasonable.

(g) Mrs Attinger gave the impression of well understanding the need for a qualified valuer. In a different context in the proceedings (T166) she made it clear that she understands a valuer’s obligation to give a correct, disinterested valuation.

(h) At all material times the funds to be advanced were determined by the valuer’s valuation.

(i) The defendant calculated the value of $425,000 by reference to the total amount she wished to borrow.

(j) It is not credible that the defendant entered into the transaction a month after the 2 March meeting without being fully cognisant of the extent of the funds to be advanced.

(k) During the period under consideration the defendant engaged the services of a solicitor.

(l) There is no evidence connecting the plaintiff with the obtaining of the valuation.

(m) The plaintiff has not been guilty of any misconduct so far as valuing the property is concerned.

(n) The defendant’s stated strategy that she would enter into the mortgage and then unravel the transaction in the Consumer Claims Tribunal is not credible.

(o) Mrs Attinger had an intention to refinace the project but this did not occur because of the dispute about costs. It is this matter, that could have been provided for by the parties, that has driven subsequent events.

60   No Default under The Mortgage

The Court has concluded that the term of the mortgage was for six months. The defendant on any view is well in default in payment of the principal.

61   Tender of Discharge of Mortgage and Costs in Relation to the Default

In late September 1999 the defendant’s solicitors wrote to the plaintiff’s solicitors advising that the defendant was waiting the outcome of a finance application to a bank to refinance the mortgage. On 1 October they advised that the defendant had obtained finance to discharge the subject mortgage. There was then correspondence between the solicitors. By 20 October the defendant was ready to settle. Clarification was sought of some aspects of the plaintiff’s claim for costs such as filing fees and expenses incurred with L.J. Hooker. No agreement was reached concerning either the quantum of costs or how the dispute might be resolved. The plaintiff’s solicitors suggested in a letter of 28 October 1999 that the payout figure should be paid on settlement and the mortgagor reserve her rights on settlement and thereafter seek to recover the balance. The plaintiff had raised $238,000 from the Commonwealth Bank and was prepared to pay $350 for costs (as specified in the s.57 (2) (b) notice). The plaintiff sought $23,529.65 as costs in addition to the principal sum. A breakdown of these costs was advised to the plaintiff’s solicitors who in turn sought particulars as to some of the items. In a letter of 28 October 1999 the plaintiff’s solicitors advised that “Should your client wish to dispute our enforcement costs we recommend they reserve their rights on settlement and seek to recover the balance after settlement. This proposal was not agreed to by the defendant who was only prepared to pay the sum of $350 for the mortgagee’s costs. The negotiations broke down at that point and the settlement did not take place.

62   This Court has to decide whether the plaintiff is entitled to costs above the $350 offered.

63   Clause 9b of the Mortgage states:

“ That all expenses consequent upon or on account of any default on the part of the Mortgagor hereunder or incurred by the Mortgagee for the preservation of or in any manner in reference to this security (any such not being in consideration of or otherwise in respect of the loan) all of which expenses shall from the time of payment or expenditure be due to the Mortgagee by the Mortgagor and payable forthwith and until payment shall carry interest at the rate mentioned in any mortgage to which this Memorandum is made applicable ( PROVIDED THAT if more than one rate shall be specified in any such Mortgage then at the higher rate so specified therein) and the amount of the same and interest as aforesaid shall be secured hereby and charged on the property comprised herein.”

64   The circumstances in which a mortgagor is entitled to costs were discussed in Project Research Pty Ltd v Permanent Trustee of Aust Ltd - BC 9001610 SC Hodgson J 14 December 1990. When considering the nature of a mortgagor’s rights associated with the equity of redemption his Honour stated at p4.6 that in such proceedings the mortgagor is generally allowed costs out of the security, unless guilty of misconduct.

65   His Honour also considered the various rules and guidelines concerning tender. Referring to English authority his Honour stated (p5.4) that a mortgagee may not refuse to accept a payment under protest. That is, the position advanced by the plaintiff’s solicitor in the letter of 28 October.

66   In the present case the defendant contends that the mortgagee has been guilty of misconduct in proceeding without first filing a statement of claim, being associated with the concealing of the February 1998 valuation and failing to comply with the provisions of the Real Property act and Conveyancing Act. These issues have been discussed earlier in this judgement. The mortgagee has not been guilty of any misconduct. So far as refusing to settle is concerned the plaintiff’s proposal that the defendant reserve her rights on settlement was the appropriate course.

67   The mortgagee does not claim the costs associated with the proceedings it commenced but in which the statement of claim was not served. Otherwise the mortgagee is entitled to its costs associated with the default in accordance with clause 9. These will need to be assessed.

68   It was the difficulties associated with agreeing on an appropriate amount for costs that led to a breakdown in the defendant’s attempt to discharge the mortgage. The mortgagee’s defence provides no defence.

69   Non Service of Statement of Claim

The defendant argues that the plaintiff must fail because proceedings were not commenced by way of statement of claim. The submission is based on the requirement in Part 4 r 2(e) that proceedings must be commenced by way of statement of claim where a claim is made by a plaintiff in proceedings for possession of land. The argument is misconceived. The present proceedings were commenced by way of statement of claim.

70   Conclusions

The plaintiff has proved an entitlement to possession of the subject property. The plaintiff seeks the opportunity to bring in short minutes of order in relation to the Court’s findings. The proceedings will be listed for directions to enable this to take place.

71   The draft Short Minutes of Order should reflect the following proposed orders of the Court.

1. The defendant’s application for adjournment is refused.

2. Leave granted to file in Court an amended cross claim as against the plaintiff.

3. Refuse leave to join additional parties identified in the defendant’s notice of motion.

4. The plaintiff is entitled to possession.

5. The plaintiff is entitled to the sum of $238,000.

6. The plaintiff entitled to the costs of recovery of possession. Such costs to be assessed.

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Last Modified: 10/22/2001